A new report from the American Hotel & Lodging Association examines the role of the hotel sector in Los Angeles’ economy and outlines growing concerns among owners and operators regarding the city’s policy environment and rising operating costs.
The report indicates that hotels remain a significant contributor to the local economy, but many operators are experiencing financial and operational strain as labor and other expenses increase faster than revenue. According to the findings, some properties have reduced staffing levels or employee hours, while others have delayed development plans or scaled back investment.
Survey data included in the report reflects a largely negative sentiment toward the current investment climate. A majority of respondents said recent labor regulations have affected operations, with many reporting staffing reductions over the past year. Most respondents also indicated that Los Angeles is not currently viewed as a favorable market for long-term hotel investment.
“Los Angeles is not hospitable to the hospitality industry. Hotels are a major economic engine for Los Angeles—creating jobs, supporting small businesses and raising critical tax revenue for local services,” AHLA President and CEO Rosanna Maietta said in a statement. “But the current policy environment is making it increasingly difficult for hotels to operate, invest and create more jobs in the city. Unless there is a greater willingness to support the business community and ensure a thriving hotel industry, many more jobs will be lost and many more businesses will close, causing a significant ripple effect across the community.”
The association cited recent measures approved by the Los Angeles City Council, including wage increases and operational requirements, as contributing to higher costs without corresponding flexibility tied to market demand. The report notes that the local hotel market has yet to return to pre-pandemic performance levels, when occupancy reached 84 percent and monthly room demand totaled 2.8 million room nights.
The report further estimates that Los Angeles hotels generate $12.5 billion in annual economic activity, support approximately 64,000 jobs and produce more than $1.1 billion in state and local tax revenue. It also finds that hotel guest spending reaches $7.2 billion annually, contributing to demand for local restaurants, retail and entertainment businesses.
View the full report here.